SMM Base Metals Market Daily Review (2013-6-4)

SHANGHAI, Jun. 5 (SMM) – 

With LME copper little changed last night, SHFE 1309 copper contract started Tuesday RMB 10/mt lower at RMB 52,960/mt. After its opening, the most active SHFE copper contract hovered near the daily moving average, with its high-end price at RMB 53,250/mt. In the afternoon, SHFE copper for September delivery was weighted down by plunging Shanghai Composite Index to RMB 52,880/mt, and finally ended at RMB 53,090/mt, up RMB 120/mt or 0.23%. Trading volumes and positions were down 104,000 lots and 18,486 lots, respectively. SHFE 1310 copper contract may become the most active one soon. Trading activity in SHFE copper market diminished compared with a week ago. SHFE 1309 copper contract has found strong support at RMB 52,500/mt, and should encounter resistance at the 60-day moving average.

 

Spot copper in Shanghai was offered at a premium of RMB 60-220/mt over SHFE 1306 copper contract prices on Tuesday. Traded prices for standard-quality copper were between RMB 53,600-53,750/mt, and RMB 53,650-53,880/mt for high-quality copper. SHFE 1309 copper contract prices rallied mildly. Premium of spot copper continued to narrow. Holders of imported copper were actively selling for cash, widening price spread with domestic copper. There was little room for arbitrage for middlemen. Trading was muted near RMB 54,000/mt. Premium should continue to fall until oversupply eases markedly. In the afternoon, quotes in spot market varied largely, and cargo holders were eager to sell goods for cash flow. Premiums were mainly offered at RMB 60-150/mt, with traded prices remaining unchanged from the morning session.

 

SHFE 1309 aluminum contract opened slightly higher at RMB 14,900/mt on Tuesday, but then slipped to RMB 14,860/mt as longs closed positions. The most active SHFE aluminum contract dropped further in the afternoon on weak Shanghai Composite Index, but did recover some losses at the tail of the session before finally closing at RMB 14,860/mt, down RMB 15/m or 0.10%. Positions decreased 624 lots to 48,752 lots. Steep decline in Chinese and US May manufacturing PMI undermined market sentiment, but improving fundamentals in aluminum markets helped rein in losses of SHFE aluminum. SHFE aluminum for September delivery should hold steady at RMB 14,800/mt in the short term.

 

Spot aluminum was traded at RMB 14,820-14,830/mt in Shanghai on Tuesday, a discount of RMB 10-30/mt over SHFE 1306 aluminum contract prices. Low-iron aluminum was traded around RMB 14,960/mt. SHFE 1309 aluminum contract prices inched down, but SHFE 1306 aluminum contract prices bucked the trend by rising, allowing most traders to hold offers firm at RMB 14,830/mt. Downstream producers and middlemen purchased in modest amounts. The most active SHFE aluminum contract then fell further, depressing buying interest. Traders, though, still held prices firm. In the afternoon, SHFE 1309 aluminum contract prices fell further, hurting market sentiment Traders cut offers slightly to RMB 14,820/mt, but lower prices failed to stoke downstream buying interest, with only middlemen purchasing in small amounts.

 

The most active SHFE 1307 lead contract price opened slightly lower at RMB 14,075/mt on Tuesday, and moved around the level in the morning trading session. At midday, the increasing buying support drove prices to cross above RMB 14,100/mt and to touch a high of RMB 14,120/mt. The most active contract finally closed at RMB 14,100/mt, up RMB 10/mt. Trading volumes spiked 498 lots to 618 lots, but positions fell sharply by 282 lost to 1,822 lots.

 

Spot lead prices in China remained little changed from Monday. Jinsha was quoted at RMB 13,950/mt, with spot discounts of RMB 125/mt over the most active SHFE lead contract price. Hanjiang was traded at RMB 13,900-13,920/mt. Smelters were more bullish to market outlook, and held back from selling, leaving supplies tight in the market. Downstream purchases fell after the continuous increases in lead prices and since end-user demand remained sluggish. 

 

SHFE 1309 zinc contract prices opened higher at RMB 14,920/mt, boosted by LME zinc prices overnight. The Shanghai Composite Index opened low but moved lower, plummeting by 1.17%, affecting the zinc market. Selling pressure also pushed SHFE zinc prices down below the 60-day moving average, closing at RMB 14,790/mt, down RMB 65/mt or 0.44%. Trading volumes of SHFE 1309 zinc contracts increased by 16,984 lots, to 92,266 lots, and positions decreased by 23,670 lots to 144,532 lots. Trading volumes increased by 33,372 lots, to 159,398 lots, and positions decreased by 37,690 lots to 334,260 lots. Zinc prices lacked upward impetus and encounter resistance at RMB 15,000/mt, with investors cautious.

 

SHFE zinc prices soared initially but later fell back today. #0 zinc prices ranged from RMB 20/mt below to RMB 20/mt above SHFE 1309 zinc contract prices, with traded prices between RMB 14,840-14,880/mt. #1 zinc prices were between RMB 14,800-14,810/mt. During the second session, SHFE zinc prices dropped further, and cargo holders held back goods and maintained prices firm, while downstream buying interest improved, but transactions were muted. #0 zinc prices ranged from RMB 20/mt below to RMB 20/mt above SHFE 1309 zinc contract prices, with traded prices between RMB 14,830-14,860/mt. As downstream buying interest was generally low, overall transactions were muted.

Mainstream traded prices in Shanghai tin market were between RMB 143,000-144,000/mt in the morning trading session Tuesday. In the afternoon, prices for Jiangxi’s brands fell to RMB 142,500/mt. Consumption remained weak with the market awaiting guides from LME tin. 

 

Jinchuan raised ex-works nickel prices to RMB 106,500/mt. In Shanghai, Jinchuan nickel prices were between RMB 105,400-105,600/mt, while Russian nickel prices were between RMB 104,400-104,600/mt. Rumors that the SRB will purchase nickel reserves affected Shanghai nickel market limitedly. Trading volumes increased slightly due to rising LME nickel prices, but transactions were still muted.